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the Philadelphia Service Center stating that a “Pure
Trust” organization has no filing requirements. We
wish to advise you that the term “Pure Trust” is not
used in the Internal Revenue Code. Whatever the name
of the trust arrangement, the taxation of the entity
must comply with the requirements of the Internal
Revenue Code. These requirements are based upon the
economic reality of the arrangement, not its nomencla-
ture.
* * * * * * *
In your response to out [sic] letter dated May 1,
1997, you stated that no beneficiary disbursements were
made and that no Forms K-1 were necessary. From this
statement, we conclude that the trusts have not treated
you as their owners, although it appears to us it
should have done so. We note also that you did not
report the trust income, deductions and credits on your
personal return for 1995. Accordingly, the trusts are
required to file their own returns. With this law in
mind, we request that you file Forms 1041 for the
Sandbar Wholesale Trust and Sandbar Real Estate Trust
with us on or before August 18, 1997. In addition, we
request that you provide us with the following documen-
tation for the tax year ended December 31, 1995:
1. The case [sic] receipts and disbursements
journals for each trust;
2. The checking and savings accounts for each
trust (along with cancelled checks and deposit slips);
3. A copy of the managing agent’s compensation
agreement referred to in the trust agreement;
4. A copy of Schedule A and the Addendum referred
to in each trust document; and
5. Any statements issued to you from the trusts
informing you of the trusts’ income, deductions and
credits that you are required to report on your per-
sonal return for 1995 * * *.
On September 29, 1997, Mr. Barmes responded in writing (Mr.
Barmes’ letter dated September 29, 1997) to revenue agent Ar-
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